S&P keeping media group on CreditWatch

Even though its Securities and Exchange Commission accounting investigation looks headed for speedy, painless resolution, Cablevision isn’t out of the debt-rating doghouse.

Credit arbiter Standard & Poor’s on Thursday said that it was keeping the New York metropolitan-area media group on CreditWatch with negative implications. Group’s main concern is the company’s fiscal health if it can’t spin off the Rainbow DBS satellite and programming division as planned.

S&P acknowledged that it originally put the company on a credit watch in July due to concerns about the SEC’s investigation into Rainbow Media accounting practices and is now confident that the findings will have no real material impact on Cablevision’s credit profile.

But its real concern is the risk that topper Chuck Dolan will not be able to spin off Rainbow (which includes the Voom satellite venture plus cable nets IFC, AMC and WE) assets as early or easily as hoped.

Failure to raise the funds this year could damage the company’s liquidity and credit health, concluded S&P credit analyst Catherine Cosentino.

Spinoff plans are dependent upon Rainbow’s ability to refinance a large chunk of debt. Failure to secure such financing would cause the project to be scrapped, the rating agency said.

“If the spinoff does not occur, the ratings could be subject to downgrade,” said S&P, citing concerns about significantly increased spending (possibly on satellites, equipment, programming or marketing) for Voom.

S&P also noted competitive risks given tough competition from rivals DirecTV and EchoStar. Voom has around 1,600 subscribers to its high-definition satcasting service.

Cablevision ended 2003 with just over $10 billion in debt on its books, including around $734 million taken out for Rainbow DBS.

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